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Published : April 17, 2014 | Author : Umang Raj
Category : Banking and Finance laws | Total Views : 8436 | Rating :

  
Umang Raj
Bangalore Institute of Legal Studies
 

A Legally Enforceable Debt u/s. 138 of the Negotiable Instruments Act, 1881

Section 138 of the Negotiable Instruments Act, 1881, can be said to be falling either in the class of acts which are not criminal in a real sense but are acts which in the public interest are prohibited under the penalty or those where although the proceedings may be criminal in form, they are really only a summary mode of enforcing a civil right. Enactment of sections 138 to 142 has been made to meet creditors' concern in a growing and developing country with a liberal economic policy and opening of more avenues for trade, commerce and industry. Creation of strict liability is an effective measure by encouraging greater vigilance to prevent the usual callous or otherwise attitude of drawers of cheques in discharge of debts or otherwise. The legislative object and purpose of section 138 is clearly to regulate financial promises in growing business, trade, commerce and Industrial activities of the country and the strict liability under section 138 promotes greater vigilance in the matters covered by it. The incorporation of the said provision is designed to safeguard the faith of the creditor in the drawer of the cheque, which is essential to the economic life of a developing country like India. Its purpose would be defeated if in the prosecution of an offence under section 138 of the Negotiable Instruments Act, 1881, the accused is permitted to raise the defence that he had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment. Monetary blood flow in the arteries of trade and business heart cannot be permitted to be calcified by the dishonour of cheques drawn by a debtor. If by the legal fiction, introduced by section 138 the dishonour of the cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge in whole or in part of any debt or liability either because the amount of money standing to the credit of that account is insufficient or that it exceeds the amount arranged to be paid from the account by an agreement with that bank, is to be deemed as an offence, it is obvious that for that absolute liability full effect must be given to the legal fiction.

Mere dishonour of a cheque for the reasons stated in section 138 of the Negotiable Instruments Act, 1881, is sufficient for commission of crime under section 138 of the Negotiable Instruments Act, 1881, and it is not material whether he had reason to believe when he issued the cheque that the cheque may not be dishonoured on presentment. For an offence under section 138 of the Negotiable Instruments Act, 1881, ‘mens rea’ is not essential, which is clearly spelt out from a reading of section 138. The said provision clearly rules out ‘mens rea’ as a constituent part of the crime. The position of law is that section 138 brings into operation the rule of strict liability and, therefore, there is nothing unreasonable, if it is provided in section 140 that certain defences may not be allowed in any prosecution under section138. The rigour of section 138 which creates dishonour of cheque for insufficiency, etc., of funds in the account as an absolute offence by legal fiction, is further maintained by making the provision in section 140 that it shall not be a defence in a prosecution for an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that section and, therefore, cannot be said to be unreasonable or arbitrary.

The state of mind of the accused person, his knowledge or reasonable belief are not the necessary Ingredients of an offence under section 138 of the Negotiable Instruments Act, 1881, and, therefore, the provision contained in section 140 of the Act that it shall not be a defence in a prosecution for an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment, cannot be said to be unreasonable and violative of article 14 of the Constitution of India.




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Article Comments

Posted by pavan kumar on December 29, 2014
Very informative.Sir I like to known,if accused like to appeal in higher court for cheque bounce case,how much money he has to pay challan to court.
Kindly advise.

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